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Lessig stars at the Stanford FCC hearing

April 18th, 2008 — victoriastodden

After Comcast admitted to stuffing seats at the FCC hearing at Harvard Law School February 24th, the FCC decided another hearing was necessary. They chose to hold it at Stanford April 17 and I’m watching the FCC’s videocast of the event, which is oddly appropriate, since the focus of the hearing is video on the internet.

After an introduction by Stanford Law School Dean Larry Kramer, FCC Chairman Martin explained that every ISP, excepting Lariat Networks from Lariat, Wyoming, was invited and declined to attend this hearing: Comcast, Verizon, Time/Warner, and AT&T. Comcast has stated it is working with an industry consortium on a Consumer Bill of Rights. The hearing begins with each of the FCC commissioners making a statement, then proceeds through panels and then opens to questions.

Commissioner Copps states that a free internet is a requirement for the type of growth, a fact we’ve seen from Silicon Valley. If network operators consolidate their control, which is more likely with fewer network operators, they’ll prevent inventors from bringing their innovations to consumers and make investing more risky. So Copps wants to eliminate and punish discrimination.

Indicating how huge this issue has become, Commissioner Adelstein states that 45k dockets were filed with the FCC for this hearing, and the vast majority of them came from public citizens. He warns that the recent consolidation across internet providers from the backbone to the largest service providers will lead to more FCC regulation. He advocates greater competition in the broadband market place since 90% is dominated by cable and telephone companies. This gives the companies who control the “last mile” (the distance from the backbone to the consumer’s computer) the ability to discriminate over packets that reach end users. He’s concerned about allegations like Verizon’s refusal to send pro-life text messages and AT&T’s censoring of Pearl Jam online. He would like a 5th principle on the FCC policy statement to address this as well as enforcement and compliance. Broadband providers should declare in clear plain English what their policies are.

Commissioner Tate applauds the industry-wide effort to create a bill of rights for P2P users and ISPs. She has a strong preference for industry based collaborative solutions over direct regulation.

Commissioner McDowell wants to ensure that the FCC takes the anticompetitive allegations, such as the text messaging one, seriously. Comcast is alleged to have manipulated packet allocation of video – video is something Comcast provides and runs the pipes for other competitor, so Comcast appears to discriminate against
bit torrent for anticompetitive reasons not just for traffic management. McDowell, like Commissioner Tate, would like to see the industry develop is own solutions to these problems such as what might come from the industry consortium Comcast is involved in and says “engineers should solve engineering problems not politicians.”

Chairman Martin states the four principles the FCC adopted in August 2005 in their internet policy statement (“Powell’s Four Freedoms”).

1. Consumers are entitled to access the lawful Internet content of their choice;
2. Consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement;
3. Consumers are entitled to connect their choice of legal devices that do not harm the network; and
4. Consumers are entitled to competition among network providers, application and service providers, and content providers.

Larry Lessig, Professor at Stanford Law School, is the first speaker on the first panel.
Lessig reminds us that companies are out to make profit and we shouldn’t trust them with public policy. The architecture of the internet has given us openness, transparency, and freedom and in a market with few firms, they can manipulate this architecture to weaken competition. It is important to note that the original openness of the internet has given us an enormous amount of economic growth – he likens the process to the electricity grid: it is transparent and open and anyone can do anything on it, as long as you know the protocols. It doesn’t ask if the TV you plug in is Panasonic or Sony and doesn’t allocate electricity based on that info. He advocates that for us to depart from this model requires a very strong demonstration that the proposed change will advance economic growth and that competition will continue.

We can’t just wait and see, says Lessig – witness the text messaging and bit torrent problems we have already. He reiterates the argument that venture capitalists needs stability about the vision of the future in order to invest. Thus the FCC needs to make a clear policy statement that net neutrality is a core principle of the internet infrastructure. In fact, Lessig says, the failure of the FCC to create
a clear policy about this is the reason for the hearing today. So the FCC needs to regulate things it understands, but is that sufficient to assure that what happens at the network level doesn’t destroy neutrality? Lessig gives two examples of such regulation, calling them “Powell’s Four Freedoms Plus.”

Plus 1) The zero price regulation: this is built into Representative Markey’s proposed bill: if data are prioritized, all data of that type must be prioritized without a surcharge. Lessig is against this: this blocks productive discrimination and so stops spread of broadband and thus growth. For example, iFilm wants fast pipes and he doesn’t care for email so these services can be differently prioritized, but iFilm’s competitors should find themselves subject to different discrimination practices by the provider.

Plus 2) Zero discrimination surcharge rules. Discrimination surcharge occurs if you have a provider that says Google pays x but iFilm pays 2x. Lessig explains this is a problem because it creates an incentive for a destructive business model such that the provider can inflate the premium price by maintaining scarcity in ordinary network provisions. This rule does allow for nondiscriminatory tiered pricing: ie. a surcharge for video but everyone pays the same price for that video privilege. Lessig’s advice is that the FCC should start here with a target of getting to broadband as a commodity like wheat – where there the market is characterized by fundamental competition in the provision of the commodity which drives the price down.

The role of net neutrality in FCC regulation. Lessig thinks net neutrality should be a very central principle, but a heavy weight and not an absolute bar. This means that countervailing notions that don’t compromise the incentive to produce open networks are ok.

When asked a question about how the commission should respond to claims that customers get less broadband then they pay for, Lessig says “the most outrageous thing about this story is you can’t get the facts straight.” He says if there were penalties for a company that misrepresents what’s going on during an investigation there would be more clarity right now.

Lessig explains that even if there were sufficient competition this is not enough to ensure net neutrality. He cites Barbara van Schewick, who is an assistant professor at Stanford Law School, co-director (with Lessig) of the Center for Internet and Society at Stanford Law School and an upcoming panelist.

von Schewick claims that markets won’t solve the problem of content discrimination on the internet. Consumers need to have in depth and standardized disclosure, and even this is not enough because there are market failures. Providers have the incentive to block applications that use lots of bandwidth and don’t translate into higher profits. This harms application innovation, aside from discouraging investment since the blocking behavior is unpredictable. Network providers need to manage networks in a nondiscriminatory way.

Robb Topolski, a panelist and Software Quality Engineer, says tests he has done show that Comcast was blocking packets at 1:45am rather than at times of congestion like they claim. Topolski also notes that, there is a general complaint form provided by the FCC but no one knows about it. He also notes that routers manage network traffic on their own – it may not be optimal but it would be better than waiting on the provider industry to self-regulate. Interestingly, consumers seem to be testing networks themselves and tools are even appearing to monitor
cellphone use by consumer (see Skydeck.com, the company started by panelist Jason Devitt).
Crossposted at Victoria Stodden

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